ELSBERRY, Mo. — If you have prescriptions, you know some of the prices are skyrocketing. And a pharmacy owner blames middlemen in the insurance process.
Elsberry, Missouri, is a town with more corn stalks than people. It has fewer than 2,000 residents, and they all rely on one pharmacy.
One regular at the Medicine Shoppe Pharmacy is 80-year-old Winston Bailey, who depends on four pills a day to deal with colon cancer.
“I'm going to say $400 a month out of pocket," Bailey said.
A retired teacher, Bailey said his savings account is slowly disappearing.
“What I thought would be comfortable and rocking chair money, it's eating into it," he said.
Jerry Callahan is the owner of Medicine Shoppe Pharmacy. He said he’s risking his job by talking with the I-Team, fearing retaliation among those who pay his bills.
“Something that needs to be done," Callahan said. "Pharmacies are closing up right and left, and it's due to reimbursement.”
He said many times his reimbursement from the PBM is below the price he pays for the medication.
He told the I-Team that middlemen involved in the drug-pricing formula are leading to skyrocketing medication costs. He said he believes these middlemen are crippling his customers and his business.
“It's just getting tougher and tougher," Callahan said. "I mean, there's not a day goes by that we fill a prescription below cost."
That means it’s getting harder and harder to operate.
“The predictions are that 30% of the independent pharmacies are going to be gone by the end of next year if things don't change," Callahan said.
If the Medicine Shoppe Pharmacy closes, Callahan's customers may have to drive 30 minutes away to get to the next closest one.
When we buy health insurance, we likely get a pharmacy benefit manager, or PBM for short. They play a major role in setting the price for your medication. But many argue they’ve grown too powerful. The top three -- CVS Caremark, Express Scripts, and OptumRx -- control 80% of the prescription drug market, according to the National Community Pharmacists Association. That impacts what you pay.
Take Humalog, a type of insulin for people with diabetes. It’s sold to pharmacies at $264. The generic version is $24. But insurance usually only covers the more expensive drug. Why? The nonprofit Pharmacists United for Truth and Transparency said PBMs get rebates from brand names. The result: more limited options for pharmacies and patients, while PBMs make a profit.
A spokesperson from the Pharmaceutical Care Management Association, the industry association representing PBMs, disagrees. They argue they drive prices down by forcing manufacturers to compete with each other.
But critics argue those discounts help the PBM, not people like Bailey. And what’s worse: Callahan said they’re operating in secrecy.
“They at least need to be transparent," Callahan said.
Pharmacy benefit managers that contract with insurers play a big role in the prices of prescription drugs at the pharmacy, according to a new analysis from the data analytics company 3 Axis Advisors. The result, according to the research: the prices set by the PBM at the pharmacy counter are highly inconsistent and unreliable. The research is part of an 88-page report, sponsored by American Pharmacy Cooperative, which represents independent pharmacies.
There are efforts to address these issues. In Washington D.C., there are more than 40 federal bills seeking to crack down on PBMs and lower drug costs, according to the American Pharmacy Cooperative. States have also passed laws to reign in certain practices.
In Illinois, a bill was passed this year protecting pharmacists from speaking out about PBMs without retaliation in order to create more transparency.
Industry sources -- including the Pharmacists United for Truth and Transparency and the Missouri Pharmacists Association -- said Missouri has a ways to go, without any sort of PBM legislation passing in nearly a decade.
And if that trend continues, Callahan said his town’s only pharmacy may have to close its doors on its neighbors, who would not have a neighborhood store to buy their medication if they can even afford it.
“It's just unreal. It's horrible," said Jody Loftin, a Medicine Shoppe Pharmacy customer, who has seen her medication prices steadily rising.
"Oh, it's just, it's really sad," Bailey said.
A spokesperson with a PBM industry association said they’re not to blame for rising drug prices, or for independent pharmacies closing. Instead, they say the bigger problem starts with drug companies that set and raise prices. Pharmacy owners like Callahan argue PBMs certainly play a part, and in the end, customers suffer.
Statements
Greg Lopes with the Pharmaceutical Care Management Association, which represents PBMs, told us in an email: “Pharmacy benefit companies are working every day on behalf of more than 275 million Americans to lower prescription drug costs. By negotiating directly with drug companies to reduce drug costs, PBMs will save Missourians over $18 billion on prescription drugs over the next 10 years. In addition, pharmacy benefit companies provide employers and public health programs with a vast array of coverage options that help lead to better health outcomes… Pharmacy benefit companies partner with all pharmacies to increase access to more affordable prescription drugs, and PBMs are working to expand access to pharmacies in rural areas where health care services are too often inaccessible for patients. It is extremely unfortunate when community pharmacies close, especially in our rural communities, but it’s important to understand that pharmacy closures are not happening at a high rate. Overall, the independent pharmacy market in the U.S. is in fact very stable, and the number of stores has increased over the last five years.”
Ron Fitzwater, spokesperson with the Missouri Pharmacy Association, told us in an email: “PBMs control the prescription marketplace. They negotiate drug prices with pharmaceutical manufacturers, oftentimes receiving large ‘rebates’ to dictate product placement on formularies, etc. They also control contracting with pharmacies, including reimbursements and metrics that pharmacists have to meet to get full reimbursement. Finally they negotiate what they are going to charge payers. This is often done in a vacuum where the payers don’t have all the data to see the complete transaction. With that kind of a backdrop, pharmacies (independents and chains) have to try to operate a business and sign contracts to bring patients to their pharmacies. Independents receive “take-it-or-leave-it contracts that don’t give them any ability to negotiate terms to allow them to cover costs in some circumstances. The main change that we have advocated for is to bring full transparency to this process - at least among the parties to the contract. Pharmacists, or at least their purchasing groups, should have the ability to negotiate reasonable terms. Payers should know where the dollars are going. Rebates should be eliminated. This would go along way towards leveling the playing field and moderating drug costs. As PBMs have gotten more aggressive, drug prices have soared. The American public cannot continue to pay for a one-sided system.”
Greg Reybold, a spokesperson with the American Pharmacy Cooperative, told us in an email: “Large PBMs employ a number of tactics that drive up drug prices for patients at the pharmacy counter while simultaneously hurting independent pharmacies. While many of these PBM practices act as a cancer on the healthcare system as a whole, so often, patients and community pharmacies in rural areas are the hardest hit. In areas where there are healthcare deserts, driving independent pharmacies to the brink of closure and driving up drug costs for patients at the pharmacy counter leads to poorer medication adherence and poorer health outcomes. The stakes couldn’t be higher which is why we need aggressive PBM reform now.”
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